When Jan Kanitz of Juneau and Antonia Lenard of Eagle River testified before a legislative committee last Saturday about personal responsibility and the Permanent Fund dividend, they spoke from completely different perspectives.
For Kanitz, it was about acknowledging that current state spending on schools, health care and the ferry system is woefully inadequate, with too much emphasis on paying out large dividends.
“I think a fixed, limited PFD as a symbolic thing helps people have buy-in to the state … I support that, but it should not bankrupt us,” she said. “I think we need a better sense of civic responsibility and personal responsibility in our state to go forward.”
Lenard favors the individual approach over the collective good. She testified that a better policy would be to guarantee residents large dividends, allowing them to exercise personal responsibility without having to rely on state-funded services.
“Probably a lot of our state-funded needs would go away because we’d have enough money individually to make decisions based upon schools and building new schools with our own money,” she said.
Their opinions were reflective of the differing views offered during a two-hour hearing of the House Ways and Means Committee on five legislative proposals affecting the Permanent Fund, its earnings and the annual dividend paid to Alaskans.
Whether any of the proposals can win legislative passage this year is highly questionable, as the issue has divided Alaskans and lawmakers for years. Without legislation, the amount of this year’s PFD will be decided as part of the usual end-of-session budget negotiations.
“No one has been brave enough” to pass a new formula for calculating the dividend, Palmer Sen. Shelley Hughes told the committee earlier in the week.
Lawmakers have been debating how to live with or change the 40-year-old dividend formula which the Legislature and governors have not followed since 2016 when falling state revenues made it unaffordable. Then, in 2018, the Legislature started sharing Permanent Fund earnings between dividends and public services as the state had drained most of its other reserves amid declining oil revenues.
The split opinions on prioritizing Permanent Fund earnings for dividends or state spending was an ongoing conversation thread during Saturday’s hearing.
For Rachel Lord, of Homer, big dividends are of little use to people if streets aren’t plowed after heavy snowstorms. For Joel Sigman, of Wasilla, the problem is that the government doesn’t know how to efficiently spend the money it gets and thus there is no reason to give the state more money that would better go to dividends.
Of the five measures before the House Ways and Means Committee, two would establish a new dividend calculation in state law and three would amend the Alaska Constitution — two of which would adopt a constitutional guarantee for the dividend.
Putting a constitutional amendment before voters requires a two-thirds majority vote in both the House and Senate, a hurdle that has been insurmountable for supporters of a constitutionally guaranteed PFD.
A change in state statute, however, requires only a majority vote in the 40-member House and 20-member Senate, and then a signature from the governor to become law.
Ketchikan Rep. Dan Ortiz is behind one of the proposed changes in the dividend statue. Ortiz, who also represents Wrangell, has proposed legislation that would split the annual draw on Permanent Fund earnings with 25% for the dividend and 75% for public services. That would produce a PFD this fall of about $1,300, growing in subsequent years.
Some of the residents who called in to testify at Saturday’s hearing — who were given two minutes each to speak — said they had difficulty understanding the legislative proposals, though many were clear that Alaskans deserve the largest possible PFD.
Ketchikan High School teacher Sara Campbell had no difficulty in being direct in her testimony. “The Permanent Fund dividend, oh my goodness, what a contentious issue. It shapes elections.”
Don Mitchell, also from Ketchikan, raised the elections issue, too. “The way the PFD is structured hurts the election process. The amount of the PFD is used as an irresponsible tool to obtain votes.”
Mitchell, who testified that he has lived in Alaska more than half a century, said he has enjoyed decades of public services “without paying state tax.” But, he added, “we now have inadequate and inconsistent funding for our state services,” such as roads and ferries.
He said he supports legislation to split Permanent Fund earnings with 75% to the budget and 25% to the PFD.
An Anchorage doctor, Royal Kiehl, testified that he remembers paying a state income tax, “when we used to pay our own way.” The Legislature in 1980 abolished the personal income tax as oil dollars filled the treasury.
Speaking in support of reducing the PFD to $1,000, with an annual inflation increase, Kiehl added: “Without intending to do so, we have turned Alaska into a welfare state, with every citizen believing they cannot live without their PFD. … The PFD has become a true addiction.”
Mark Sabbatini of the Juneau Empire contributed to this report.
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